Correlation Between Yum China and Jack In

Can any of the company-specific risk be diversified away by investing in both Yum China and Jack In at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Yum China and Jack In into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yum China Holdings and Jack In The, you can compare the effects of market volatilities on Yum China and Jack In and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Yum China with a short position of Jack In. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum China and Jack In.

Diversification Opportunities for Yum China and Jack In

-0.09

Correlation Coefficient

Yum China  Jack In

Good diversification

The 3 months correlation between Yum and Jack is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Yum China Holdings and Jack In The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack In and Yum China is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Yum China Holdings are associated (or correlated) with Jack In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack In has no effect on the direction of Yum China i.e., Yum China and Jack In go up and down completely randomly.

Pair Corralation between Yum China and Jack In

Given the investment horizon of 90 days Yum China Holdings is expected to generate 0.92 times more return on investment than Jack In. However, Yum China Holdings is 1.08 times less risky than Jack In. It trades about 0.07 of its potential returns per unit of risk. Jack In The is currently generating about -0.05 per unit of risk. If you would invest  4,520  in Yum China Holdings on September 27, 2024 and sell it today you would earn a total of  459.00  from holding Yum China Holdings or generate 10.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yum China Holdings  vs.  Jack In The

Yum China Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yum China Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Yum China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Yum China and Jack In

The main advantage of trading using opposite Yum China and Jack In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum China position performs unexpectedly, Jack In can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jack In will offset losses from the drop in Jack In's long position.

The idea behind Yum China Holdings and Jack In The pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.